Advertising

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Demystifying Programmatic Digital Advertising

Programmatic advertising first arrived on the digital marketing scene in early 2014,

and whether you’ve encountered it before or not, it’s difficult to ignore. A quick Google search will reveal phrases like “Future of Marketing”, “The Next Big Thing” and “The Fastest Growing Segment of Online Advertising”, and with all of that hype, programmatic is undeniably something you want to know about.

But what is programmatic?
Sure, you might have seen it alongside industry jargon terms like RTB, SSPs, DSPs, and so on, but what do those terms actually mean? And how do they affect you?

Programmatic advertising is quite simply the process of automating ad buying. This process is in turn divided into Programmatic Direct and Programmatic Real Time Bidding.

It’s also one of the fastest growing segments of digital advertising. Statistics from IDC show that programmatic will include 60% of all advertising online by 2019, or an average growth of 59% year over year. This prediction is closely matched by Borrell Associates prediction of 61% by 2019, showing that most data points towards rapid growth.

(Image Courtesy of Digital E Factor)

Programmatic is the automated process of booking, flighting, analyzing, and optimizing online campaigns and ads using demand-side software (DSP) interfaces which work with a bidding client and a bidder service. The advertiser adds data through the DSP, which accesses available ad space and publisher ad space through the SSP (Sell-Side Platform), automatically connecting with ad networks, and publishers. Today’s DSP interfaces have the ability to target users based on specific criteria, exclude targets, match users across devices, and can reach billions of impressions per day. You also save time, because rather than purchasing ads from publishers, you’re bidding on already available ad space in an ad marketplace.

Automated advertising is already seeing wholesale client-side adoption by large companies like Kellogg, who saw as much as a six fold increase in ROI (Return on Investment) using programmatic. Other companies like Hyundai, Disney Resorts, Spotify, AOL, and many others have already at least partially adopted programmatic, and benefited from it.

Plus, with large marketing experts like Shane Murphy, EMEA marketing chief at AdRoll, a large ad retartegting platform in Dublin, fully backing the technology with quotes like “We fully believe that programmatic will overtake direct selling“, it’s hard to ignore that programmatic advertising is in fact going somewhere.

How Programmatic Advertising Adds ValueProgrammatic advertising is automated ad buying, and that immediately turns into a game changer. Large marketing teams dedicated to researching and buying ad impressions, tracking them, and rebuying them aren’t entirely necessary with the system, because a large part of the buying, bidding, and placing ads becomes automated. Companies still need a digital marketing expert to be in charge, and even a large research team, but it does cut down on the amount of work involved.

Most importantly, programmatic changes the game for marketers, because it allows you to purchase single impressions using platforms, which automate the buying process for you, allowing you to optimize and control ads much more closely than when purchasing impressions in the thousands.

This means you can be more selective when choosing whom you show your ads to, which can improve retargeting, targeting, and optimization. For example, where a traditional retargeting ad approach might allow you to show your ad to 1,000 people on a website after they visited your site or a specific product page, RTB (Real Time Bidding) allows you to further refine that to ignore people who have just purchased your products, and only show your ad to people who meet specific qualifications, across thousands of websites.

Essentially, programmatic ads change the value of what you’re paying for. Instead of bidding primarily for ad space, you’re also bidding on the data available from the user being targeted by the ad. You’re paying for better, more efficient targeting.

This also cuts down on your need for salespersons, negotiation, and decision making when bidding on ads. The process is done automatically using algorithms based on existing data, making it that much simpler to integrate. Research analysts like Heather Way list this as a pro and a con of programmatic, because when one person can do the work of 20, traditional companies fear that they will lose the human touch in their marketing, but when a marketer is still in control of the ads, that isn’t the case.

Finally, because programmatic operates in real time, you can track click-through’s and conversion in real time, allowing you to track daily and even hourly goals.

Takeaways:

Only pay for impressions that meet the context and criteria you select

Increase reach to multiple sites by spreading your budget across them, instead of purchasing thousands of impressions on one page

Scale campaigns easily using millions of data points

Track analytics and ROI in real time.

Adopting Programmatic Into Your Company

The ‘client in-house’ operating model option is best suited to advertisers that have the significant global digital spend and for whom consumer acquisition or direct to consumer sales are core. That makes the up-front cost of people and technology a long-term investment in sustained competitive advantage. That advantage is derived from the impact that programmatic has on the advertising itself, as well as the visibility, control and flexibility that the advertiser then has to adjust and adapt its approach to meet market opportunities. It’s an advantage that is built on large amount of real-time data, and so lends itself to the digital-first, data rich businesses that are perhaps already running search and social in-house. Indeed the synergies with these operations can be significant.

The process of moving ads over to programmatic can be a daunting and costly, not only because it requires a major shift in ad management techniques, but also because it can be difficult to begin large scale, high risk changes. Most companies worry about ad fraud, viewability, and retaining the human touch in their brand, but all of these are approachable using programmatic. For example, with real time analytics, it is possible to identify and even monitor fraudulent traffic. You can also place a higher bid for above the fold ads, to ensure that you’re paying a premium for ads that users see more of. And buying ads by the impression allows you to better tailor who your ads are seen by, while branding tools allow you to decide which sites you don’t want your ads to be seen on.

You can also start small. Programmatic allows you to scale your campaigns based on your key performance indicators, and optimize them continuously as you go. You can get started with integration simply by choosing a platform or provider and creating a basic marketing strategy for the campaign.

Programmatic Advertising PlatformsChoosing a programmatic advertiser or platform should largely depend on the platforms capabilities and your company needs.

Do they work with:

Your campaign goals

Your budget (Cost Per Click/Cost Per Impression you are comfortable with)

Your target audience

A scale that works with your inventory sourcing

Retargeting

Targeting demographic criteria (such as age, gender, income)

Mobile ads

Video/Banner/& Other Digital Ads?

Data sources you’re comfortable with (third party, first party, etc.)

There are dozens of programmatic advertising platforms available to businesses of all sizes. But you’ll also want to pay attention to whether they offer self service (you use your own marketing team) or marketing team support (your very small team interacts with their larger one). Adobe, for example, offers self serve programmatic as part of their Marketing Cloud. The following include a few companies offering programmatic advertising platforms:

Because many programmatic advertising platforms and providers offer their own solutions, features, and opportunities, it is crucial that you choose the one that offers the most for your business. It is also important that you choose a company based on their ability to provide the best return on ad spend. It’s also a good idea to select two or more specialized providers, and work with them on a trial to ensure that they are the right fit for you.

Direct vs. Real Time BiddingDirect programmatic is the process of purchasing ad space outright from a company. RTB or Real Time Bidding is the act of bidding on ad space in real time.

Direct – Programmatic Direct, also known as automated guaranteed or programmatic guaranteed, is the process of buying ad space outright instead of bidding on it. This is similar to the current process of manually purchasing ad space, except, your platform automates the process, cutting down on time expenditure, while improving access to ad inventory, allowing better pricing control, and offering seamless performance analytics in real time.

RTB – Real Time Bidding sounds like something that would be too slow for ads, but the process is fully automated. Your Demand Side Platform (DSP) automates the process using rates, criteria, and values that you plug in during setup. When someone matching your target demographic criteria loads a page with ad space owned by your advertiser, your DSP begins bidding on the ad, and the winning ad is displayed as the page finishes loading. The whole process, from targeting, to the auction, to the transaction takes place in a matter of milliseconds.

RTB means that advertisers no longer have to commit to purchasing ad space from a website that might not offer ROI, but can instead target, re-adjust budgets, and purchase impressions in real time. This allows for better optimization, because you can target to relevant people across any websites accessible through your platform, in real time.

While RTB has obvious advantages over programmatic direct in the short term, they can be highly competitive together in the long term. For example, if you know that a single web page generates a high return on investment, it would make sense to attempt to purchase that ad space in bulk, which could potentially save you money, and ensure that you get more ad space. However, direct programmatic still requires a heavy amount of research to ensure that it is a good investment.

Customizing & Retargeting Programmatic Ads

After integrating programmatic advertising into your business, it’s relatively easy to begin customizing and optimizing your ads. Programmatic advertising is applicable across your entire sales funnel, for initiating contact with one-touch contacts who are just entering your sales funnel, to retargeting to existing customers, loyalty programs, or bringing multi-touch visitors (who have visited your site more than once) further into the sales funnel.

Defining Goals – It is important to define goals for your marketing, and with programmatic, these goals can be reset and recreated on a daily or even hourly basis if you have enough resources .

Target Audience – Your audience criteria and preferred data is crucial to optimizing programmatic, but it does not have to remain static. RTB is extremely dynamic, so you can tweak data, advertise to different buyer profiles, and run multiple campaigns at once based on different data.

Mapping Programmatic to Inventory – Your inventory is a crucial part of any sales pipeline, and programmatic allows you to map your inventory to your advertising, and adjust it accordingly.

Staying in Beta – The main benefit of any dynamic, real time technology is the ability to test, improve, and constantly change for the better. RTB allows you to change as your audience does, improving your ads, retargeting consumers, targeting loyalty programs, and recognizing new opportunities as they arise.

A Word of Caution for MarketersProgrammatic is also rampant with ad fraud and it is a big concern for many marketers when executing as more than 1/3 of all online traffic is fraudulent. The concept of Programmatic technology is that it is ever learning and with improvements it can identify fraudulent activity. (This is a whole other blog post)

Marketers are the custodians of our very fragile brand safety whatever platforms your brand works with ensure your ads are appear on ‘safe’ sites. One company I came across, Integral Ad Science, strives to ensure that ads only appear on brand safe pages on sites.

The Future of ProgrammaticWith improved transparency, better optimization, and lower manpower requirements, it’s clear to most why experts are naming programmatic the future of online advertising. However, it’s not going to replace traditional ad buying anytime in the near future. Both will continue to operate side by side, especially in non-digital ad markets. However, programmatic is expanding rapidly, and as of late 2015, more than four fifths of large brands and advertisers in the U.S. have purchased ads programmatically according to Business Insider. Plus, with companies like Nestle, Unilever, GSK, and TUI all showing profit with programmatic, it isn’t hard to see why programmatic is on the rise.